Vietnam is aiming to move towards a 90 percent cashless economy by 2020 by reducing cash transactions and increasing electronic payments. With 90 percent of current transactions conducted in cash and only 30 percent of citizens having a bank account, the government faces an uphill task to achieve its goals. Recent regulatory reforms and emergence of private players have been encouraging towards creating a sustainable digital payments market.
According to the Vietnam E-commerce Report 2015 conducted by the Ministry of Industry and Trade, cash and bank transfers are the most popular forms of payment for buyers. Digital buyers’ use of e-wallets actually declined from 37% to 11% over the same period. Consumers have little incentive to move away from cash to online banking, digital wallets, or card-based payments due to lack of bank accounts.
Almost 44 percent of customers of commercial banks have used digital services in 2016. Transactions conducted through digital channels are predicted to contribute 40 percent of banking revenue by 2018. Bankcard market in Vietnam has been growing steadily over the years driven by the middle-class, low banking penetration, increase in e-commerce transactions, and new card technologies.
Digital payment solutions or e-wallets offering services such as bill payment, online shopping, and money transfer are fast emerging as alternatives to traditional banking. In just one quarter in 2016, e-wallet penetration increased by 50 percent. Commercial banks are also increasing cooperation with e-Wallets to further their services and value addition.
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